Workers in search of an economy Fears of immigrant influx from East spurs Western aid

December 30, 1990|By Patrick Oster | Patrick Oster,Special to the Sun

BRUSSELS, BELGIUM — Brussels, Belgium--At the height of the Cold War, people used to hear: "The Russians are coming!" In the postwar era, things haven't changed much. The Russians and their former Warsaw Pact allies may still be coming. But this time it's with suitcases rather than tanks.

Unrest in the Soviet Union and its six former Eastern European satellites -- Hungary, Poland, Bulgaria, Romania, East Germany and Czechoslovakia -- could send millions of economic refugees rushing across the former front lines of the Cold War in search of food, shelter and jobs.

"One estimate is that there'll be 30 million unemployed in the Soviet Union alone," said a U.S. diplomat following the situation. "That kind of figure . . . focuses your thinking."

That's obviously what happened with President Bush. He lifted some trade restrictions from the Soviet Union this month, clearing the way for up to $1 billion in food credits, even though President Mikhail S. Gorbachev's government has not liberalized Soviet immigration laws, a requirement to qualify for such aid.

"I want perestroika to succeed," said Mr. Bush, stating broadly the U.S. concern that if millions do leave the Soviet Union, those who remain might oust Mr. Gorbachev and set up a less friendly government.

"Whose finger is going to be on the button?" asked the U.S. diplomat, who asked not to be identified.

Western Europeans similarly are worried that the possible inflow of millions of refugees could strain national budgets, if not bankrupt them. Led by the 12-nation European Community, the West is scrambling to come up with a multibillion-dollar package of food and development aid to shore up Soviet and Eastern European governments and to encourage those countries' citizens to stay home.

When the Soviets finally liberalize immigration laws, probably next summer, as many as 3 million Soviets might apply to leave for the West, said Vladimir Shemiatenkov, Soviet ambassador to the EC.

Such eye-popping estimates have prompted Sweden to set up a refugee camp on an offshore island and Austria to increase troops along its eastern border. Mr. Shemiatenkov warns that any Western attempt to create the equivalent of a Berlin Wall to keep immigrants out "would be morally obnoxious and also politicallyand practically impossible."

The only way to avoid "superflows" of emigres, he argued, is to pump massive Western investment into the Soviet Union and Eastern Europe.

"Massive" hardly seems enough. Eastern Europe, hit by a $6.5 billion oil-price increase caused by the Persian Gulf crisis and an attendant loss of business with Iraq and Kuwait, needs $44 billion in outside aid between now and the end of 1992, the World Bank estimates. The 24 richest nations of the world, led by the EC, have put together a $21 billion aid package.

Eastern Europe also owes $80 billion to foreign banks, a figure dwarfed by the $1.3 trillion it needs for long-term financing, according to the European Bank for Reconstruction and Development.

Most of the promised Western aid, including $2.5 billion in emergency Soviet aid approved by the EC at its Dec. 14-15 summit in Rome, is still in the pipeline.

Western officials worry that the billions they plan to send might wind up in the hands of black marketeers or leaders who do not share their view that rigorous imposition of free-market principles is the only way to create lasting, healthy economies.

The shakier the leadership, however, the more problems Eastern European politicians have in embracing capitalist ways, which, in the short run, produce hyperinflation and unemployment.

Prime Minister Tadeusz Mazowiecki, whose government cut subsidies, raised prices and thereby reduced living standards in Poland, found this out the hard way when dissatisfied Poles cast more votes for a political nobody than for him in the first round of their recent presidential election.

When significant Western aid begins to flow, probably after the first of the year, it will be tied to specific projects, such as market education programs, rather than dumped into central treasuries. Eastern Europeans, some of whom have no experience with concepts as basic as profits or costs, will be taught to think like capitalists so that they won't waste the money.

In Poland, for example, checking accounts were virtually unknown until about a year ago, and U.S. accounting firms had to be hired so that the government would know what to charge for previously subsidized flour or milk or how much the Gdansk shipyards were worth if the government wanted to sell them.

"It was like colonizing Mars," said a U.S. diplomat in Warsaw. "Everything had to be started from scratch."

Caution in aiding Eastern Europe and the Soviet Union may be logical, said Richard Portes, head of the Center for Economic Policy Research in London, but it could create disaster.